Projections show Social Security to be only 13 years from not being able to pay full benefits without extra money put in from the Federal General Fund. (Many feel this is not a problem, since the Federal General Fund has been taking Social Security funds and spending them on everything but Social Security for over 40 years.)
Recently, the University of Maryland did something like a survey earlier this year to find out how folks feel on some changes to be made to Social Security. NOTE: Not all the changes reduce the coming deficit, some increase it, but are meant to fix the shortfalls that have occurred over the last 35 plus years of benefits for lower income folks not really keeping up with inflation.
One popular fix involves raising the payroll tax cap. Currently $147,000 is the 2022 maximum wages subject to Social Security Tax. It is increased every year by inflation. The proposal is to start taxing all wages over $400,000 again. Just this change would eliminate 61% of the coming shortfall. The survey showed this idea was favorable by 81% of folks.
The next most popular topic (also 81% approved) is to reduce Social Security Benefits for High Income folks. The top 20% of income earners receiving Social Security Benefits would be affected. Now this would only reduce the shortfall by 11%, so not anywhere near as helpful, but makes poor folks feel better about the “rich” paying more. (Is that really a good thing?)
The next most popular was to gradually (over next 20 years) raise the retirement age. Currently at 67 years old. This is projected to save 14% of the shortfall.
Finally, the next most popular item is raising the Social Security Payroll Tax rate. Currently at 6.2% of gross wages. If it was raised to 6.5% that would reduce the shortfall by 16%. Most folks wouldn’t even notice the difference in their paycheck. Some have proposed raising the tax rate to 7.4%.
Some of the increased benefit proposals that were popular were… 1)Raising the Minimum Benefit from $951 to $1,341; 2)Changing the Cost-of-Living Calculation from one method that results in lower increases every year to a different method that increases benefits higher each year; 3)Doing a one-time increase in Benefits for folks over 80 years old by 5%. (This is designed to help those folks who have been hurt the most by low annual benefit increases over many years.) These 3 proposed increases in Social Security Benefits would increase the Social Security shortfall by 24%
If all of these proposals were passed, it would decrease the Social Security shortfall by 78%. Not bad.
There you have it. Can Congress come together to do any or all of these? We shall see.
Have you heard? Leviticus 19:32a says, “You shall rise up before the gray head and honor the face of the elderly…”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 882-4459. On the web at BullisAndCo.com Also on Facebook.